Kalama City Council agrees on property tax, utility rate increases

After about two hours of discussion, the council directed staff to prepare ordinances raising the property tax the allowed 1% and utilities about 5.5% overall. The new rates will be voted on in an upcoming meeting. 

Under state law, the city can only raise property taxes by 1% each year. In 2020, the council voted unanimously not to raise the 2021 property tax rate and banked the 1% increase for a future year. Last year, the council raised the tax 0.5% and banked the other half percent. 

At least three of the five council members didn’t want to use the banked capacity for next year. 

With the 1% increase, the projected actual levy for 2023, including a $14,790 refund levy from the county, is $536,090, said Clerk/Treasurer Coni McMaster.

The property tax levy rate will decrease from $1.28 in 2022 to $1.08 per $1,000 of assessed valuation. A home’s assessed value will determine how much the city’s portion of the property tax would change for each taxpayer. 

As staff recommended during the last two meetings, the council agreed to increase utility rates by 9.5% for water, 5.5% for sewer and 9.5% for stormwater. The utility tax will remain at 10%. 

The proposed rates match what the utility rate study suggests they should be for 2023, but that doesn’t make up for the lower-than-called-for increases in the last two years, McMaster said. 

Most of the council agreed to raise the low-income discount eligibility level from 200% to 300% of federal poverty level. The discount itself will remain the same.

The utility bill for an average household using 600 cubic feet of water would increase about $11 per month, from $187 to $198. A household using 1,000 cubic feet of water would see an increase of about $14 per month, from $238 to $252. 

Those totals include an estimated 3% increase to the garbage rate, which is set by Waste Control and has not yet been announced this year. But McMaster said the company recently told her that increase may be closer to 10%. 

Compared to 10 other Cowlitz, Lewis and Clark County utility rates, Kalama has the fourth-highest utility bill overall, according to a city spreadsheet. 

Staff requested the increases because water and sewer expenditures have increased at a higher rate than revenues, McMaster said. Other factors include the high inflation rate, increases in costs of chemicals, pipe materials, fuel, wages and insurance, she said. 

Council and staff discussed if the amount of water/sewer utility revenue transferred to reserves could decrease to help cover operating costs instead and keep rates lower. The city currently transfers about $900,000 annually to reserves.

Councilwoman Wendy Conradi said she is OK with transferring money to reserves but questioned how much it needs to be. 

“It’s my fiduciary responsibility, I have to be able to make sure we’re not asking for too much or not enough,” she said. 

Kalama’s financial policy requires having four months worth of utility operating reserves, about $1.6 million, on hand in case of emergency, said City Administrator Adam Smee. That doesn’t include reserves saved up for projects, he said. 

The city could get away with transferring less to reserves but it would be more costly down the line when bigger rate increases are needed to pay for a large repair or replacement project, Smee said. 

Earlier this month, Smee said the city is already using reserve funding to pay for projects that should be considered maintenance costs because it doesn’t have enough money to pay from regular operations. 

The council agreed to increase other fees including the animal impound fee, a payment the police rarely impose on people when their animals run away, said Chief Ralph Herrera. Other fees set to increase include Community Building cleaning rates, police services hourly rate for events, and a planning pre-application conference fee.